Financial Services Committee

Press Releases

Bachus: More Oversight of CDFI Program Needed

WASHINGTON,
March 9, 2010 -

-Financial Services Committee Ranking Member Spencer Bachus made the following statement during a Full Committee hearing entitled, "Community Development Financial Institutions (CDFIs): Their Unique Role and Challenges Serving Lower-Income, Underserved and Minority Communities."

"Thank you, Mr. Chairman for holding this hearing on the role of Community Development Financial Institutions.

"My interest in the CDFI Fund program dates back to my days as the Chairman of the Committee's Oversight and Investigations Subcommittee in the late 1990s, when our Oversight Subcommittee uncovered serious irregularities and conflicts of interest in the Fund's process for awarding grants. That investigation resulted in the resignations of the agency's two top officials, and led Treasury to adopt a number of reforms to address the abuses identified by the Subcommittee. While I am confident that the CDFI Fund is now being operated in a far more professional and transparent manner than was the case back then, I still have concerns about the program's effectiveness that I hope can be explored at today's hearing.

"Community Development Financial Institutions are a source of subsidized capital to communities that face difficulties attracting funds for economic development. But the subsidy that the government provides is not free. We need to ensure that the CDFI Fund program is properly administered so that funds are provided to individuals and entities that both have productive uses for it and would otherwise not have access to financing.

"CDFIs have a proven track record of providing economic development dollars to underserved communities. According to the Treasury Department, CDFI initiatives created or maintained more than 70,000 full-time jobs. This success should not, however, lead to looser standards. I hope that our witnesses, particularly the Treasury Department, will be able to discuss the operational improvements that can be implemented as the CDFI Fund program evolves.

"Finally, even though the CDFI Fund program has had some success in promoting capital investment in underserved communities, it would be wrong to redirect TARP money to this program. TARP was established to stabilize the financial system at a time of extreme market disruption. Given the alarming deficits that this country is running, the extraordinary measures that were taken during the financial crisis should be wound down as soon as practical - and that includes TARP. It is time for the government to get out of the private market and let American businesses innovate and spur economic growth without the fear of government intervention."